XXXXXX X. XXXXXX
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 15th day of December, 1998, by and between
Nine West Group Inc. (the "Company") and Xxxxxx X. Xxxxxx (the "Executive").
WHEREAS, the Executive has been employed by the Company as its Executive
Vice President, Chief Financial Officer and Treasurer pursuant to an
employment agreement dated as of October 19, 1998 (the "Prior Agreement");
WHEREAS, the Company desires to provide for the continued employment of
the Executive on terms competitive with those of other corporations, and the
Executive is willing to rededicate himself and continue to serve the Company;
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change of Control (as defined herein) exists and
that the threat or the occurrence of a Change of Control can result in
significant distraction of the Company's key management personnel because of
the uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders for the Company to retain the
services of the Executive in the event of a threat or occurrence of a Change
of Control and to ensure the Executive's continued dedication and efforts in
such event without undue concern for the Executive's personal financial and
employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change
of Control, the Company desires to enter into this Agreement with the
Executive.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. TERM.
The Company shall employ the Executive for a period commencing as of
December 15, 1998 and ending as of December 31, 2003, as renewed in accordance
with the following sentence (the "Employment Period"). Thereafter, the
Executive's employment with the Company will continue, and this Agreement will
be automatically renewed, for successive two (2)-year terms, unless either
party to this Agreement advises the other in writing, at least 180 days prior
to the expiration of the initial Employment Period or any renewal term, that
such party does not wish to renew. The Executive's employment may be
terminated by the Company prior to the expiration of the Employment Period
only for Cause (as defined herein) or by reason of the Executive's Disability
(as defined herein), in which event no further payments shall be made to the
Executive following such termination except amounts due and owing as of such
date, and except as otherwise provided in Section 10.2 (a) of this Agreement
in the event of Disability. The Executive's employment under this Agreement
and his rights to compensation hereunder shall be deemed to cease as of the
date of the Executive's death, except amounts due and owing as of such date
and except as otherwise provided in Section 10.2 (a) of this Agreement. In
the event the Executive's employment with the Company terminates prior to a
Change of Control (as defined herein) either because his employment is
terminated by the Company without Cause (as defined herein) or the Executive
terminates his employment with the Company for Good Reason (as defined herein,
except without regard, for purposes of this Section 1, to the fact that
termination occurred prior to a Change of Control), the Executive shall be
entitled to the sum of (A) all Accrued Compensation and a Pro Rata Bonus (as
defined herein) and (B) two times the Executive's Base Amount (as defined
herein, except with annual base salary being determined at the time of the
termination of employment rather than with respect to a Change of Control) and
two times the Executive's target bonus of 75% as contemplated in Section 3 (b)
of this Agreement and shall also be entitled to the benefits referred to in
Section 10.2 (b)(3), (4), (5) and (6) (without regard to the fact that no
Change of Control has occurred) on the following basis: the benefits referred
to in such sections shall continue as though, or be calculated as though, as
the case may be, the period referred to in each such section was twenty four
(24) months rather than thirty six (36) months (or, in the case of Section
10.2 (b)(4), with reference to two (2) complete years of credited service
rather than three (3) complete years of credited service.
2. DUTIES.
(a) The Executive shall render services to the Company on a
full-time basis as its Executive Vice President, Chief Financial Officer and
Treasurer. The Executive's services shall be rendered in accordance with such
rules and instructions as the Company shall establish from time to time.
(b) In the event that the Executive's duties, position or title
undergo changes in the course of his employment with the Company in ways not
expressly provided for in this Agreement, such changes shall not constitute a
rescission of this Agreement, or of any other terms hereof, and the Agreement
shall remain in full force and effect as to all terms not affected by such
changes; PROVIDED, HOWEVER, that any such new duties, position or title shall
be consistent with the Executive's current status and shall further be
consistent with Section 21.9(a)(1).
3. COMPENSATION.
(a) SALARY. The Executive's base salary will be $450,000 per
annum, with such salary increased annually, commencing on or about May 1,
1999, by an amount at least equal to five percent (5%) or, if greater, the
Cost-of-Living Factor multiplied by the Executive's then current salary. The
Cost-of-Living Factor shall be a fraction (i) the numerator of which will be
the Cost-of-Living Index at September 1 of the twelve (12)-month period
immediately preceding the term for which the salary adjustment is being
computed and (ii) the denominator of which will be the Cost-of-Living Index at
September 1 in the twelve (12)-month period immediately preceding such twelve
(12)-month period. The Cost-of-Living Index for purposes of this calculation
will be the Consumer Price Index for all Urban Consumers, New York - Northern
New Jersey - Long Island, NY-NJ-CT (1982-84 = 100), published by the Bureau of
Labor Statistics, or if such Index shall cease to be published, then the
Cost-of-Living Index shall be such fair equivalent index as the Company and
the Executive select.
(b) BONUS. The Executive shall be entitled to an annual bonus
in accordance with the Incentive Plan (as defined herein) with a target level
of 75%.
(c) CAR ALLOWANCE. The Executive shall receive a car allowance
of $15,000 per annum, payable in accordance with the Company's usual practice
for such an allowance.
(d) VACATION. The Executive shall receive four (4) weeks of
paid vacation each year during the term hereof. The Executive shall be paid
an amount in cash equal to the value of any vacation time remaining unused at
the end of a given year during the term of this Agreement.
4. BENEFITS AND EXPENSES.
(a) FRINGE BENEFITS. The Executive shall be eligible to
participate in such medical and dental programs and other fringe benefits as
the Company provides to other similarly situated employees.
(b) EXPENSES. The Company will pay or reimburse all reasonable
business expenses incurred by the Executive with respect to work performed by
the Executive outside or inside the United States on our behalf. The
Executive will promptly submit invoices or vouchers to us for all expenses
incurred by the Executive or paid with Company credit cards.
5. NON-COMPETITION PAYMENT.
(a) NONRENEWAL BY EMPLOYEE. If this Agreement expires pursuant
to Section 1 hereof because the Executive elects not to renew this Agreement
as of or, if applicable, as of the day immediately following the last day of
any renewal term, then, except as provided otherwise in this Section 5, in
consideration of the Executive's covenant not to compete set forth in Section
6 of this Agreement, the Company will pay the Executive a non-competition
payment equal to his then current annual salary plus the amount of bonus paid
to him with respect to the immediately preceding fiscal year (the
"Non-Competition Payment"). The Non-Competition Payment shall be payable in
twelve (12) equal monthly installments on the last day of each month beginning
with the month immediately following nonrenewal of this Agreement, and the
Executive shall not be required to seek or accept other employment while
receiving such payment; PROVIDED, HOWEVER, that the Company may, in connection
with such nonrenewal, elect at such time to release the Executive from the
covenant not to compete, and the Company will thereupon be relieved of the
obligation to make the Non-Competition Payment provided in this Section 5(a).
(b) NONRENEWAL BY THE COMPANY. If this Agreement expires
pursuant to Section 1 hereof because the Company elects not to renew this
Agreement or, if applicable, as of the day immediately following the last day
of any renewal term, then, except as provided otherwise in this Section 5, in
consideration of the Executive's covenant not to compete set forth in Section
6 of this Agreement, the Company will pay the Executive the Non-Competition
Payment. The Non-Competition Payment shall be payable in twelve (12) equal
monthly installments on the last day of each month beginning with the month
immediately following nonrenewal of this Agreement, and the Executive shall
not be required to seek or accept other employment while receiving such
payment; PROVIDED, HOWEVER, that the Executive may elect to be released from
the covenant not to compete, and if the Executive accepts employment with a
competitor (defined with reference to Section 6.1 of this Agreement) of the
Company at any time when Non-Competition Payments are being made under this
Section 5(b), the Company's obligation with respect to any further
Non-Competition Payments shall cease.
6. COVENANTS OF THE EXECUTIVE
6.1. NON-COMPETITION AND NON-SOLICITATION
The Executive acknowledges and recognizes (i) the highly competitive
nature of the business of the Company, (ii) the importance to the Company of
the Confidential Business Information and Trade Secrets (as defined herein) to
which the Executive will have access, (iii) the importance to the Company of
the knowledge and experience possessed by it relating to sources of supply of
footwear and accessories in Brazil, China, Europe, Hong Kong, Taiwan, Korea,
Mexico and the United States, and its relationships with such sources of
supply, developed by it or its predecessors over many years, and (iv) the
position of responsibility which the Executive will hold with the Company.
Accordingly, the Executive agrees that during the Non-Compete Period (as
defined herein), the Executive will not, directly or indirectly, (x) engage in
the business activities engaged in by the Company on the date hereof and
during the Executive's employment, such business activities being
manufacturing, selling, producing, marketing, distributing, designing, line
building and otherwise dealing in women's footwear and accessories, of the
types in which the Company does business as of the date of such cessation of
employment, and produced in Brazil, China, Europe, Hong Kong, Taiwan, Korea,
Mexico or the United States, in any State of the United States in which the
Company is then doing business, the District of Columbia, and any other
country in which the Company is then doing business, whether such other
engagement is as an officer, director, employee, proprietor, consultant,
independent contractor, partner, advisor, agent or investor (other than as a
passive investor in less than 5% of the outstanding capital stock of a
publicly traded corporation); (y) assist other persons or businesses in
engaging in any business activities prohibited under clause (x); or (z) induce
any employees of the Company to engage in any such activities or to terminate
their employment or hire or attempt to hire any employees of the Company.
Notwithstanding anything in this Section 6.1 to the contrary, nothing shall
prohibit the Executive from engaging in the business activities otherwise
herein proscribed to the extent that the business activities are performed for
an organization that derives forty percent (40%) or less of its consolidated
gross revenues from the manufacture, sale, production, marketing or
distribution of women's footwear. In no event shall the non-competition
provisions of this Section 6.1 be deemed to apply to business activities
relating to accessories produced and sold by licensees of the Company under
prevailing license agreements with the Company unless the Company is itself
also producing such merchandise.
6.2. APPLICATION AND PERIOD.
(a) Before a Change of Control, and except as provided in Section 5
hereof, Section 6.1 shall apply ONLY if (i) the Company terminates the
Executive's employment for Cause or (ii) the Executive voluntarily terminates
his employment without Good Reason, as contemplated by Section 1 of this
Agreement.
(b) Following a Change of Control, Section 6.1 shall apply ONLY if
(i) the Company terminates the Executive's employment for Cause, (ii) the
Executive voluntarily terminates his employment without Good Reason (as
defined herein) or (iii) the employment of the Executive is terminated and
such termination results in payments to the Executive under Section 10.2(b)
hereof.
(c) The "Non-Compete Period" shall mean (i) the Employment Period
plus a one (1) year term following nonrenewal of this Agreement under the
circumstances described in Section 5(a) or 5(b), or (ii) a period of one (1)
year following the termination of the Executive's employment with the Company
under any other circumstances where the covenant not to compete applies under
this Section 6.2.
6.3. NON-PUBLICATION.
During the Non-Compete Period, neither the Executive nor the Company
shall publish any statement or make any statement (under circumstances
reasonably likely to become public) critical of the other or in any way
adversely affecting or otherwise maligning the reputation of the other or its
customers, suppliers, agents or subcontractors. In particular and without
limitation of the foregoing, the Executive shall not, in any circumstance
likely to become public, discourage any person, firm, partnership,
corporation, trust or any other entity or third party from selling any
business or assets to the Company, entering into any joint venture or other
business relationship with the Company, or investing in the Company. Any
statements made by either party in connection with legal, administrative or
arbitration proceedings, or that are required to be made by the Executive
pursuant to applicable law, shall not be prohibited by this Section 6.3.
7. CONFIDENTIALITY.
(a) The Executive acknowledges that the Company is engaged in
the highly competitive business of designing, developing, manufacturing,
marketing and selling footwear and accessories. The Company's involvement in
this business has required and continues to require the expenditure of
substantial amounts of money and the use of skills developed over considerable
time. As a result of these investments of money, skill and time, the Company
has developed and will continue to develop certain valuable trade secrets and
confidential business information that are peculiar to the Company's business
and the disclosure of which would cause the Company great and irreparable
harm. The Executive acknowledges that, during the course of his employment by
the Company, he will receive and/or have access to "Trade Secrets" and/or
"Confidential Business Information" (as defined herein), and that, had the
Executive not had the opportunity to work at the Company, he would not have
become privy to such information.
(b) The term "Trade Secrets" means any technical or financial
information, design, process, procedure, formula or improvement that is
valuable and not generally known to the Company's competitors. To the fullest
extent consistent with the foregoing, Trade Secrets shall include, without
limitation, all information and documentation, whether or not subject to
copyright, pertaining to product developments, methods of operation, cost and
pricing structures, and other private, confidential business matters.
(c) The term "Confidential Business Information" means any data
or information and documentation, other than Trade Secrets, which is valuable
to the Company and not generally known to the public, including but not
limited to:
i. Financial information, including but not limited to
earnings, assets, debts, prices, cost information, sales
and profit projections or other financial data;
ii. Marketing information, including but not limited to
details about ongoing or proposed marketing programs or
agreements by or on behalf of the Company, marketing
forecasts, results of marketing efforts or information
about impending transactions;
iii. Product information, including but not limited to
development plans, designs, and product costs; and
iv. Product source and customer information, including
but not limited to any data regarding actual or potential
supply sources, agency agreements or arrangements and
actual or potential customers.
(d) The Executive agrees that, except as required to fulfill his
obligations during the course of his employment, he will not, during his
employment with the Company or after such employment has ceased, directly or
indirectly use, disclose or disseminate to any other person, organization or
entity or otherwise employ any Trade Secrets or Confidential Business
Information. Nothing in this paragraph shall preclude the Executive from
disclosing or using Trade Secrets or Confidential Business Information if (i)
the Trade Secrets or Confidential Business Information have become generally
known, at the time the Trade Secrets or Confidential Business Information are
used or disclosed, to the public or to competitors of the Company except
through or as a result of the Executive's act or omission; or (ii) the
disclosure of the Trade Secrets or Confidential Business Information is
required to be made by any law, regulation, governmental body or authority, or
court order, provided that the Executive will give the Company prompt written
notice of such requirement so that the Company may seek an appropriate
protective order or similar remedy. The Executive agrees to deliver to the
Company all computer files and tapes, books, records and documents (whether
maintained in paper, electronic or any other medium) relating to or bearing
upon any Trade Secrets or Confidential Business Information, upon the
cessation of his employment, and the Executive agrees not to retain any copies
or extracts thereof. Notwithstanding the foregoing, the Executive shall be
entitled to retain such records as may be reasonably necessary for personal
tax or legal compliance or planning.
(e) It is expressly understood and agreed that, although the
Executive and the Company consider the restrictions contained in Section 6 and
this Section 7 to be reasonable, if a final judicial determination is made by
a court having jurisdiction that the time or territory or any other
restriction contained in Section 6 or this Section 7 is an unreasonable or an
otherwise unenforceable restriction, it is the intention of the parties that
the provisions of Section 6 and this Section 7 shall not be rendered void, but
such court shall reduce the duration, area or activity covered by such
provision and, in its reduced form, such provision shall then be enforceable
and shall be enforced.
8. INJUNCTIVE RELIEF.
The covenants set forth in Sections 6 and 7 are independent and
shall be enforceable by a court of equity through the granting of a temporary
restraining order, preliminary injunction and/or permanent injunction. In the
event of a breach of Section 6 or Section 7 of this Agreement, the Executive
consents to the entry of an injunction. Such equitable enforcement shall be
in addition to and shall not prejudice the right of the Company to an
appropriate monetary award.
9. REPRESENTATION AND WARRANTY.
The Executive hereby represents and warrants to the Company that his
entering into this Agreement will not result in the breach of, or constitute a
violation of, any agreement, order or decree by which the Executive is bound,
and that the Executive is not subject to any agreement, restriction or
covenant, whether written or oral, which restricts his ability to enter into
this Agreement or to perform his duties as set forth herein.
10. CHANGE OF CONTROL PROVISIONS.
10.1. TERM OF PROVISIONS. The provisions of this Section 10 shall
take effect as of date of this Agreement, and shall continue in effect until
December 31, 2001 (the "Change of Control Term"); PROVIDED, HOWEVER, that if
the Company gives written notice to the Executive on or before January 1,
2000, and on or before each January 1 thereafter, that it wishes to extend the
Change of Control Term for one (1) year beyond the date on which it would
otherwise expire, the Change of Control Term shall be so extended; PROVIDED,
FURTHER, HOWEVER, that following the occurrence of a Change of Control, the
Change of Control Term shall not expire prior to the expiration of thirty-six
(36) months after such occurrence.
10.2. TERMINATION OF EMPLOYMENT. If, during the Change of Control
Term, the Executive's employment with the Company shall be terminated on a
date that falls within the thirty-six (36) month period following a Change of
Control, the Executive shall be entitled to the following compensation and
benefits:
(a) If the Executive's employment with the Company shall be
terminated (1) by the Company for Cause or (2) by the Executive other than for
Good Reason, the Company shall pay to the Executive his Accrued Compensation
(as defined herein). If the Executive's employment with the Company shall be
terminated by the Company by reason of the Executive's Disability or death,
the Company shall pay to the Executive (or, in the event of death, his estate)
an amount equal to the Base Amount plus the amount of bonus paid to him with
respect to the immediately preceding fiscal year.
(b) If the Executive's employment with the Company shall be
terminated for any reason other than as specified in Section 10.2(a), the
Executive shall be entitled to the following:
(1) the Company shall pay the Executive all Accrued
Compensation and a Pro Rata Bonus (as defined herein); provided, however, that
notwithstanding the definition of Pro Rata Bonus set forth in Section 21.12 of
this Agreement, "Pro Rata Bonus" for purposes of this Section 10.2 (b) (1)
shall be calculated as though the Bonus Amount (as defined herein) was 75% of
the Executive's Base Amount (as defined herein).
(2) the Company shall pay the Executive as severance pay
and in lieu of any further compensation for periods subsequent to the
Termination Date (as defined herein) an amount equal to the sum of (A) three
(3) times the Executive's Base Amount (as defined herein) and (B) three (3)
times the Executive's Bonus Amount (as defined herein);
(3) for thirty-six (36) months following the Executive's
Termination Date (the "Continuation Period"), the Company shall continue on
behalf of the Executive and his dependents and beneficiaries the life
insurance, disability, medical, dental, prescription drug and hospitalization
coverages and benefits provided to the Executive immediately prior to the
Change of Control or, if greater, the coverages and benefits provided at any
time thereafter. The coverages and benefits (including deductibles and costs
to the Executive) provided in this Section 10.2(b)(3) during the Continuation
Period shall be no less favorable to the Executive and his dependents and
beneficiaries than the most favorable of such coverages and benefits referred
to above. The Company's obligation hereunder with respect to the foregoing
coverages and benefits shall be reduced to the extent that the Executive
obtains any such coverages and benefits pursuant to a subsequent employer's
benefit plans, in which case the Company may reduce any of the coverages or
benefits it is required to provide the Executive hereunder so long as the
aggregate coverages and benefits (including deductibles and costs to the
Executive) of the combined benefit plans is no less favorable to the Executive
than the coverages and benefits required to be provided hereunder. This
Section 10.2(b)(3) shall not be interpreted so as to limit any benefits to
which the Executive, his dependents or beneficiaries may be entitled under any
of the Company's employee benefit plans, programs or practices following the
Executive's termination of employment, including but not limited to retiree
medical and life insurance benefits;
(4) the Company shall pay in a single payment an amount in
cash equal to the excess of (A) the Supplemental Retirement Benefit (as
defined herein) had (w) the Executive remained employed by the Company for an
additional three (3) complete years of credited service under each
supplemental and other retirement plan in which the Executive was a
participant on the Termination Date (or until his 65th birthday, if earlier),
(x) his annual compensation during such period been equal to his Base Amount
and the Bonus Amount, (y) the Company made employer contributions to each
defined contribution plan in which the Executive was a participant on the
Termination Date (in an amount equal to the amount of such contribution for
the plan year ending immediately preceding the Termination Date) and (z) the
Executive become fully (100%) vested in his benefit under each supplemental
and other retirement plan in which the Executive was a participant on the
Termination Date, over (B) the lump sum actuarial equivalent of the aggregate
retirement benefit the Executive is actually entitled to receive under such
supplemental and other retirement plans. For purposes of this Section
10.2(b)(4), "Supplemental Retirement Benefit" shall mean the lump sum
actuarial equivalent of the aggregate retirement benefit the Executive would
have been entitled to receive under the Company's supplemental and other
retirement plans including but not limited to The Pension Plan for Associates
of Nine West Group Inc. (the "Pension Plan"). For purposes of this Section
10.2(b)(4), the "actuarial equivalent" shall be determined in accordance with
the actuarial assumptions used for the calculation of benefits under the
Pension Plan as applied prior to the Termination Date in accordance with the
Pension Plan's past practices;
(5) the Company shall pay the Executive a lump sum in cash
equal to the present value (determined using a discount rate equal to one
hundred twenty percent (120%) of the applicable mid-term Federal rate
determined pursuant to Section 1274(d) of the Code (as defined herein),
compounded semiannually) of thirty-six (36) monthly payments, each of which
payments is equal to the monthly automobile allowance payable by the Company
in respect of the Executive immediately prior to the Termination Date; and
(6) for thirty-six (36) months following the Executive's
Termination Date, the Company shall continue to pay the Company portion of
premiums under the split-dollar life insurance policy maintained in respect of
the Executive.
(c) The amounts provided for in Sections 10.2(a) and 10.2(b)(1),
(2), (4) and (5) shall be paid in a single lump sum cash payment within ten
(10) days after the Executive's Termination Date (or earlier, if required by
applicable law).
(d) Upon the occurrence of a Change of Control, all options held
by the Executive on the date of the Change of Control shall vest and become
immediately exercisable and all restrictions on shares of restricted stock
shall lapse; PROVIDED, HOWEVER, such accelerated vesting and/or lapse of
restrictions shall not be applicable if its implementation would preclude the
application of pooling-of-interests accounting treatment to a transaction for
which such treatment is to be adopted by the Company and which has been
approved by the Board of Directors, and the holders of options and restricted
stock shall not be entitled to any accelerated vesting in such event.
(e) The severance pay and benefits provided for in this Section
10.2 shall be in lieu of any other pay to which the Executive may be entitled
under this Agreement or any other severance or employment agreement with the
Company; PROVIDED, HOWEVER, that the Executive shall receive compensation or
benefits other than as provided herein to the extent that the Executive is
entitled to receive such compensation or other benefits at the time of his
termination, determined in accordance with the employee benefit plans of the
Company and other applicable agreements, programs and practices as in effect
from time to time.
(f) If the Executive's employment is terminated by the Company
without Cause prior to the date of a Change of Control but the Executive
reasonably demonstrates that such termination (1) was at the request of a
third party who has indicated an intention or taken steps reasonably
calculated to effect a Change of Control (a "Third Party") and who effectuates
a Change of Control or (2) otherwise arose in connection with, or in
anticipation of, a Change of Control which has been threatened or proposed and
which actually occurs, such termination shall be deemed to have occurred after
a Change of Control, it being agreed that any such action taken following
shareholder approval of a transaction which if consummated would constitute a
Change of Control, shall be deemed to be in anticipation of a Change of
Control provided such transaction is actually consummated.
10.3 EFFECT OF SECTION 280G OF THE INTERNAL REVENUE CODE.
(a) Notwithstanding any other provision of this Agreement to the
contrary, and except as provided in Section 10.3(b), to the extent that any
payment or distribution of any type to or for the benefit of the Executive by
the Company, any Person who acquires ownership or effective control of the
Company or ownership of a substantial portion of the Company's assets (within
the meaning of Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), and the regulations thereunder), or any Affiliate of such
Person, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the "Total Payments"), is or will be
subject to the excise tax imposed under Section 4999 of the Code (the "Excise
Tax"), then the Total Payments shall be reduced (but not less than zero) if
and to the extent that a reduction in the Total Payments would result in the
Executive retaining a larger amount, on an after-tax basis (taking into
account federal, state and local income taxes and the Excise Tax), than if the
Executive received the entire amount of such Total Payments. Unless the
Executive shall have given prior written notice specifying a different order
to the Company to effectuate the foregoing, the Company shall reduce or
eliminate the Total Payments, by first reducing or eliminating the portion of
the Total Payments which are not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the
Determination (as defined herein). Any notice given by the Executive pursuant
to the preceding sentence shall take precedence over the provisions of any
other plan, arrangement or agreement governing the Executive's rights and
entitlements to any benefits or compensation.
(b) If the reduction of the Payments as provided in Section
10.3(a) would exceed $25,000, Section 10.3(a) shall not apply and the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments.
(c) The determination of whether the Payments shall be reduced
pursuant to this Section 10.3 and the amount of such reduction, and the
determination of whether a Gross-Up Payment is payable, shall be made at the
Company's expense, by an accounting firm selected by the Company which is one
of the five (5) largest accounting firms in the United States (the "Accounting
Firm"). The Accounting Firm shall provide its determination (the
"Determination"), together with detailed supporting calculations and
documentation to the Company and the Executive within ten (10) days of the
Termination Date, if applicable, or such other time as requested by the
Company or by the Executive (provided the Executive reasonably believes that
any of the Payments may be subject to the Excise Tax), and if the Accounting
Firm determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect to
any such Payments. The Determination shall be binding, final and conclusive
upon the Company and the Executive.
(d) If a Gross-Up Payment is determined to be payable, it shall
be paid to the Executive within twenty (20) days after the Determination (and
all accompanying calculations and other material supporting the Determination)
is delivered to the Company by the Accounting Firm. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive, absent
manifest error. As a result of uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the Company
should have been made ("Underpayment"), or that Gross-Up Payments will have
been made by the Company which should not have been made ("Overpayments"). In
either such event, the Accounting Firm shall determine the amount of the
Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the amount of such Underpayment (including any applicable
interest and penalties) shall be promptly paid by the Company to or for the
benefit of the Executive. In the case of an Overpayment, the Executive shall,
at the direction and expense of the Company, take such steps as are reasonably
necessary (including the filing of returns and claims for refund), follow
reasonable instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such Overpayment,
PROVIDED, HOWEVER, that (i) the Executive shall not in any event be obligated
to return to the Company an amount greater than the net after-tax portion of
the Overpayment that he has retained or has recovered as a refund from the
applicable taxing authorities and (ii) if a Gross-Up Payment is determined to
be payable, this provision shall be interpreted in a manner consistent with an
intent to make the Executive whole, on an after-tax basis, from the
application of the Excise Tax, it being understood that the correction of an
Overpayment may result in the Executive repaying to the Company an amount
which is less than the Overpayment. The cost of all such determinations made
pursuant to this Section 10.3 shall be paid by the Company.
11. NOTICE OF TERMINATION. Any intended termination of the
Executive's employment by the Company shall be communicated by a Notice of
Termination from the Company to the Executive, and any intended termination of
the Executive's employment following a Change of Control by the Executive for
Good Reason shall be communicated by a Notice of Termination from the
Executive to the Company.
12. FEES AND EXPENSES. The Company shall pay, as incurred, all legal
fees and related expenses (including the costs of experts, evidence and
counsel) that the Executive may incur as a result of or in connection with (a)
the Executive's contesting, defending or disputing the basis for the
termination of the Executive's employment, (b) the Executive's hearing before
the Board of Directors of the Company as contemplated in Section 21.5 of this
Agreement or (c) the Executive seeking to obtain or enforce any right or
benefit provided by Section 10 of this Agreement or by any other plan or
arrangement maintained by the Company under which the Executive is or may be
entitled to receive benefits; PROVIDED THAT, with respect to (a), (b) and (c),
the legal fees and expenses relate to the Executive's assertion of his rights
under Section 10 of this Agreement; PROVIDED FURTHER, that, in the case of
(a), (b) and (c), the Company shall not be required to pay the Executive's
legal fees and related expenses if it is finally determined by the final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been taken) that the
Executive's claims are frivolous.
13. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement (including any Notice of
Termination) shall be in writing, shall be signed by the Executive if to the
Company or by a duly authorized officer of the Company if to the Executive,
and shall be deemed to have been duly given when personally delivered or sent
by certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses last given by each party to the other, provided that all
notices to the Company shall be directed to the attention of the Board with a
copy to the Secretary of the Company. All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third
business day after the mailing thereof (whichever is earlier), except that
notice of change of address shall be effective only upon receipt.
14. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Company and
for which the Executive may qualify, nor shall anything herein limit or reduce
such rights as the Executive may have under any other agreements with the
Company, except as explicitly provided herein. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan or program of the Company shall be payable in accordance with such plan
or program, except as explicitly modified by this Agreement.
15. (a) FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including
but not limited to any set-off, counterclaim, defense, recoupment, or other
claim, right or action which the Company may have against the Executive or
others.
(b) NO MITIGATION. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise and no such payment shall be offset or reduced
by the amount of any compensation or benefits provided to the Executive in any
subsequent employment except as provided in Sections 5(c) and 10.2(b)(3).
16. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Executive and the Company. No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreement or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by any party which are not
expressly set forth in this Agreement.
17. SUCCESSORS; BINDING AGREEMENT.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company. The Company shall require its Successors and Assigns,
by agreement in form and substance reasonably satisfactory to the Executive,
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession or assignment had taken place.
(b) Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal personal representative.
18. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York without
giving effect to the conflict of laws principles thereof. Any action brought
by any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in New York County in the State of New York.
19. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto, and supersedes all prior agreements,
including but not limited to the Prior Agreement, understandings and
arrangements, oral or written, between the parties hereto, with respect to the
subject matter hereof.
21. DEFINITIONS.
21.1. ACCRUED COMPENSATION. For purposes of this Agreement,
"Accrued Compensation" shall mean all amounts of compensation for services
rendered to the Company that have been earned or accrued through the
Termination Date but that have not been paid as of the Termination Date
including, without limitation (a) base salary, (b) reimbursement for
reasonable and necessary business expenses incurred by the Executive on behalf
of the Company during the period ending on the Termination Date and (c)
vacation pay.
21.2. AFFILIATE. For purposes of this Agreement, "Affiliate"
means, with respect to any Person, any other Person directly or indirectly
controlled by, controlling or under common control with such Person.
21.3. BASE AMOUNT. For purposes of this Agreement, "Base Amount"
shall mean the Executive's annual base salary at the rate in effect as of the
date of a Change of Control or, if greater, at any time thereafter, determined
without regard to any salary reduction or deferred compensation elections made
by the Executive.
21.4. BONUS AMOUNT. For purposes of this Agreement, "Bonus
Amount" shall mean 50% of the Executive's Base Amount.
21.5. CAUSE. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive
(a) has been convicted of a felony (including a plea of
nolo contendere), the time for appeal of which has elapsed;
(b) intentionally and continually failed substantially to
perform his reasonably assigned duties with the Company (other than a failure
resulting from the Executive's incapacity due to physical or mental illness or
from the assignment to the Executive of duties that would constitute Good
Reason) which failure continued for a period of at least thirty (30) days
after a written notice of demand for substantial performance, signed by a duly
authorized officer of the Company, has been delivered to the Executive
specifying the manner in which the Executive has failed substantially to
perform; or
(c) intentionally engaged in illegal conduct or willful
misconduct which is demonstrably and materially injurious to the Company.
For purposes of this Agreement, no act, nor failure to act, on the Executive's
part, shall be considered "intentional" unless the Executive has acted, or
failed to act, with a lack of good faith and with a lack of reasonable belief
that the Executive's action or failure to act was in the best interest of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Company's
Chairman of the Board, Chief Executive Officer or a senior officer of the
Company or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The termination of
employment of the Executive shall not be deemed to be for Cause pursuant to
subparagraph (b) or (c) above unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the affirmative vote
of not less than three-fourths of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, the Executive is guilty of the conduct described
in subparagraph (b) or (c) above, and specifying the particulars thereof in
detail. Notwithstanding anything contained in this Agreement to the contrary,
no failure to perform by the Executive after a Notice of Termination is given
to the Company by the Executive shall constitute Cause for purposes of this
Agreement.
21.6. CHANGE OF CONTROL. A "Change of Control" shall mean the
occurrence during the term of the Agreement of:
(a) An acquisition (other than directly from Nine West
Group Inc.) of any common stock of Nine West Group Inc. ("Common Stock") or
other voting securities of Nine West Group Inc. entitled to vote generally for
the election of directors (the "Voting Securities") by any "Person" (as the
term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), immediately after
which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%) or more of the
then outstanding shares of Common Stock or the combined voting power of Nine
West Group Inc.'s then outstanding Voting Securities; PROVIDED, HOWEVER, in
determining whether a Change of Control has occurred, Voting Securities which
are acquired in a Non-Control Acquisition (as defined herein) shall not
constitute an acquisition which would cause a Change of Control. A
"Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit
plan (or a trust forming a part thereof) maintained by (A) Nine West Group
Inc. or (B) any corporation or other Person of which a majority of its voting
power or its voting equity securities or equity interest is owned, directly or
indirectly, by Nine West Group Inc. (a "Subsidiary"), (ii) Nine West Group
Inc. or its Subsidiaries, or (iii) any Person in connection with a Non-Control
Transaction (as defined herein);
(b) The individuals who, as of December 15, 1998, are
members of the Board of Nine West Group Inc. (the "Incumbent Board"), cease
for any reason to constitute at least a majority of the members of the Board;
PROVIDED, HOWEVER, that if the election, or nomination for election by Nine
West Group Inc.'s shareholders, of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the Incumbent Board;
PROVIDED FURTHER, HOWEVER, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board (a
"Proxy Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(1) A merger, consolidation, reorganization or other
business combination with or into Nine West Group Inc. or in
which securities of Nine West Group Inc. are issued, unless
such merger, consolidation, reorganization or other business
combination is a "Non-Control Transaction." A "Non-Control
Transaction" shall mean a merger, consolidation, reorganization
or other business combination with or into Nine West Group Inc.
or in which securities of Nine West Group Inc. are issued
where:
(A) the shareholders of Nine West Group Inc.,
immediately before such merger, consolidation,
reorganization or other business combination own directly
or indirectly immediately following such merger,
consolidation, reorganization or other business
combination, at least sixty percent (60%) of the combined
voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation,
reorganization or other business combination (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities
immediately before such merger, consolidation,
reorganization, or other business combination,
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation,
reorganization or other business combination constitute at
least two-thirds (2/3) of the members of the board of
directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of
the combined voting power of the outstanding voting
securities of the Surviving Corporation, and
(C) no Person other than (i) Nine West Group
Inc., (ii) any Subsidiary, (iii) any employee benefit plan
(or any trust forming a part thereof) that, immediately
prior to such merger, consolidation, reorganization or
other business combination was maintained by Nine West
Group Inc., the Surviving Corporation, or any Subsidiary,
or (iv) any Person who, immediately prior to such merger,
consolidation, reorganization or other business
combination had Beneficial Ownership of thirty percent
(30%) or more of the then outstanding Voting Securities or
common stock of Nine West Group Inc., has Beneficial
Ownership of thirty percent (30%) or more of the combined
voting power of the Surviving Corporation's then
outstanding voting securities or its common stock.
(2) A complete liquidation or dissolution of Nine West
Group Inc.; or
(3) The sale or other disposition of all or
substantially all of the assets of Nine West Group Inc. to any
Person (other than (i) any such sale or disposition that
results in at least fifty percent (50%) of Nine West Group
Inc.'s assets being owned by a subsidiary or subsidiaries or
(ii) a distribution to Nine West Group Inc.'s stockholders of
the stock of a subsidiary or any other assets).
Notwithstanding the foregoing, a Change of Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding common
stock or Voting Securities as a result of the acquisition of Common Stock or
Voting Securities by Nine West Group Inc. which, by reducing the number of
shares of Common Stock or Voting Securities then outstanding, increases the
proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change of Control would occur (but for the operation of
this sentence) as a result of the acquisition of shares of Common Stock or
Voting Securities by Nine West Group Inc., and after such share acquisition by
Nine West Group Inc., the Subject Person becomes the Beneficial Owner of any
additional shares of Common Stock or Voting Securities which increase the
percentage of the then outstanding shares of Common Stock or Voting Securities
Beneficially Owned by the Subject Person, then a Change of Control shall
occur.
21.7. COMPANY. For purposes of this Agreement, all references
to the Company shall be deemed to include the Company and any Affiliate of the
Company, and any respective Successors and Assigns.
21.8. DISABILITY. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with the Company for six (6)
consecutive months and, within the time period set forth in a Notice of
Termination given to the Executive (which time period shall not be less than
thirty (30) days), the Executive shall not have returned to full-time
performance of his duties; PROVIDED, HOWEVER, that if the Company's Long Term
Disability Plan, or any successor plan (the "Disability Plan"), is then in
effect, the Executive shall not be deemed disabled for purposes of this
Agreement unless the Executive is also eligible for long-term disability
benefits under the Disability Plan (or similar benefits in the event of a
successor plan).
21.9. GOOD REASON. (a) For purposes of this Agreement, "Good
Reason" shall mean the occurrence after a Change of Control of any of the
following events or conditions:
(1) a change in the Executive's responsibilities or
job description (including reporting responsibilities) that represents a
material adverse change from the Executive's responsibilities or job
description as in effect immediately prior thereto;
(2) a reduction in the Executive's annual base salary
below the Base Amount;
(3) the relocation of the offices of the Company at
which the Executive is principally employed to a location more than fifty (50)
miles from the location of such offices prior to the Change of Control, except
required travel on the business of the Company to an extent substantially
consistent with the Executive's business travel obligations at the time of the
Change of Control;
(4) the failure by the Company to pay to the Executive
any portion of the Executive's current compensation or to pay to the Executive
any portion of an installment of deferred compensation under any deferred
compensation program of the Company in which the Executive participated,
within seven (7) days of the date such compensation is due;
(5) the failure by the Company to (A) continue in
effect (without reduction in benefit level and/or reward opportunities which
with respect to the Incentive Plan shall include a reduction in the potential
bonus entitlement for comparable corporate performance by the Company and its
subsidiaries) any material compensation or employee benefit plan in which the
Executive was participating immediately prior to the Change of Control, unless
a substitute or replacement plan has been implemented which provides
substantially identical compensation or benefits to the Executive or (B)
provide the Executive with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward opportunities) to those
provided for under each other compensation, employee benefit or fringe benefit
plan, program or practice in which the Executive was participating immediately
prior to the Change of Control;
(6) the failure of the Company to obtain from its
Successors or Assigns the express assumption and agreement required under
Section 17(a) hereof; or
(7) any purported termination of the Executive's
employment by the Company which is not effected pursuant to a Notice of
Termination satisfying the terms set forth in the definition of Notice of
Termination (and, if applicable, the terms set forth in the definition of
Cause).
(b) Any event or condition described in Section 21.9(a)(1)
through (7) which occurs prior to a Change of Control but which the Executive
reasonably demonstrates (1) was at the request of a Third Party who
effectuates a Change of Control or (2) otherwise arose in connection with, or
in anticipation of a Change of Control which has been threatened or proposed
and which actually occurs, shall constitute Good Reason for purposes of this
Agreement notwithstanding that it occurred prior to a Change of Control, it
being agreed that any such action taken following shareholder approval of a
transaction which if consummated would constitute a Change of Control, shall
be deemed to be in anticipation of a Change of Control provided such
transaction is actually consummated.
21.10. INCENTIVE PLAN. For purposes of this Agreement,
"Incentive Plan" shall mean the Company's First Amended and Restated Bonus
Plan or any successor annual incentive plan, maintained by the Company.
21.11. NOTICE OF TERMINATION. For purposes of this Agreement,
"Notice of Termination" shall mean a written notice of termination of the
Executive's employment, signed by the Executive if to the Company or by a duly
authorized officer of the Company if to the Executive, which indicates the
specific termination provision in this Agreement, if any, relied upon and
which sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason, Disability or Cause shall not serve to waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.
21.12. PRO RATA BONUS. For purposes of this Agreement, "Pro
Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a
fraction the numerator of which is the number of days in the fiscal year in
which the Executive's Termination Date occurs that have elapsed through the
Termination Date and the denominator of which is 365.
21.13. SUCCESSORS AND ASSIGNS. For purposes of this Agreement,
"Successors and Assigns" shall mean, with respect to the Company, a
corporation, individual, person or other entity acquiring all or substantially
all the assets and business of the Company, as the case may be, whether by
operation of law or otherwise.
21.14. TERMINATION DATE. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death, his
date of death, (b) if the Executive's employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period) and (c) if the Executive's
employment is terminated for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination for Cause shall not
be less than thirty (30) days, and in the case of a termination for Good
Reason following a Change of Control shall not be more than sixty (60) days,
from the date such Notice of Termination is given); PROVIDED, HOWEVER, that if
within thirty (30) days after any Notice of Termination is given the party
receiving such Notice of Termination in good faith notifies the other party
that a dispute exists concerning the basis for the termination, the
Termination Date shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, or by the final judgment,
order or decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been taken). Notwithstanding the
pendency of any such dispute, the Company shall continue to pay the Executive
his Base Amount and continue the Executive as a participant (at or above the
level provided prior to the date of such dispute) in all compensation,
incentive, bonus, pension, profit sharing, medical, hospitalization,
prescription drug, dental, life insurance and disability benefit plans in
which he was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved (whether or not the dispute is
resolved in favor of the Company); PROVIDED FURTHER, that if the dispute
results in the payment by the Company to the Executive of the amounts
contemplated under Section 10.2(b) hereof, the amount of such payments shall
be reduced by any Base Amount paid to the Executive during the pendency of the
dispute. Except as provided in the last proviso of the preceding sentence,
notwithstanding the outcome of any dispute, the Executive shall not be
obligated to repay to the Company any amounts paid or benefits provided
pursuant to this sentence.
22. SURVIVAL. The Executive's rights to receive payments under
Sections 5 and 10.2 of this Agreement shall survive any termination of this
Agreement and termination of the Change of Control Term that may occur during
the pendency of a dispute as contemplated by Section 21.14.
23. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall for all purposes be deemed an original, and all of which
shall constitute the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officers and the Executive has executed this Agreement
as of the day and year first above written.
NINE WEST GROUP INC.
/s/Xxxxxxx Xxxxxx
-------------------------------
By: Xxxxxxx Xxxxxx
Its: Chief Executive Officer
XXXXXX X. XXXXXX
/s/Xxxxxx X. Xxxxxx
-------------------------------
ATTEST
/s/Xxxx X. Xxxxx
----------------------------
By: Xxxx X. Xxxxx
